US presidential election: Trading the Trump factor – Nomura

Research Team at Nomura, suggest that markets rhetoric of the US presidential race from both parties (although much more so from Donald Trump) has increasingly been trade-unfriendly.

Key Quotes

“While the result of the election is less of a binary risk than a “Brexit”, we see some “no brainer” trades that we fully expect the market to look at based on the trade policy rhetoric alone. However, in the event of a Trump presidency the USD would not necessarily weaken across all FX. USD would likely outperform the US trade-dependent currencies of MXN, CAD and CNY, but versus the “safe-haven” currencies such as JPY, we could see USD underperform.

There are still two major question marks over 1) whether Donald Trump can actually win, and 2) what he would do if elected. Nevertheless, the uncertainty over how US politics and trade relations will evolve following the results of the 8 November election mean it should garner more market attention, especially as the implied probability from bookmakers of a Trump presidency is now higher than that of a “Brexit”.”